Interestingly, both stocks have traded around the same price today: CSIQ shares today are up 17 cents, or 4%, to $4.36, while YGE shares are down 46 cents, or over 9%, at $4.35.

There was one downgrade of Yingli shares today, by Miller Tabak‘s Chris Kettenmann, who cut his rating to Sell from Neutral.

Writes Kettenmann, “While we expect YGE to have success in a growing China market, without increased visibility on project level demand in the region and with the expectations Chinese market margins are low relatively to N. American opportunities we are shifting to a negative stance on shares.”

He adds, however, “With prudent opex management over 2012 and beyond we believe the company has a chance at reaching breakeven or slightly better in 2013.”

Kettenmann cut his Q4 estimate to a loss of 19 cents a share from a loss of 16 cents a share. He cut his 2012 EPS estimate to a loss of 77 cents a share from a prior expectation for a profit of 15 cents a share.

Of the notes I’ve seen today, it seems many on the Street are inclined to shrug off the dual warnings as being slightly more negative for Yingli, slightly better for Canadian, but leaving many of the concerns about the solar group in place:

Gordon Johnson, Axiom Capital Management: Recommends shorting CSIQ given that the divergence in warnings is to his mind a mirage: “So how is CSIQ, a “Tier 2” player, outdoing YGE, a “Tier 1” vendor? Well, based on our discussions with industry contacts in China/Canada yesterday evening, we have learned that due to the fact that Chinese solar companies recognize revenues on shipment, rather than cash collection, & there have been a growing number of receivables that have gone uncollected, the creditors (i.e., Chinese banks who have extended hundreds of millions in debt to solar PV companies recently) to the lion’s share of Chinese solar module companies have now limited the amount of shipments solar companies can rely on via receivables, using the amount of “hard cash” module companies have in the bank as a “covenant” on how many shipments they can recognize where money is due in the future. Thus, when considering, unlike TSL, STP, & YGE, CSIQ was able to sell projects in Canada for cash in C4Q11, it is our opinion that CSIQ’s C4Q11 shipment upside is deceiving (the cash CSIQ collected on the cash sale of projects allowed it to show higher shipments). We believe this is one-time in nature for CSIQ.”

Philip Shen, Roth Capital Partners: Reiterates a Neutral rating on Yingli shares, and a $4 price target. He cut his Q4 revenue estimate to $387 million versus $426 million previously, but he’s waiting till Yingli’s February 29th conference call to adjust his 2012 numbers. “YGE bucked the recent trend of positive—or at least less negative—preannouncements by STP and CSIQ, and, instead, talked down shipments, while heaping on over $500mn of write-downs and impairments. We were surprised by the missed shipment expectations, especially given YGE’s Tier 1 brand.”

Tim Arcuri, Citigroup: Reiterates a Sell rating and a $1 price target. “20%. YGE continues to be very aggressive w/shipments and volume in China as it solidifies its brand in the region, but this should further pressure ASP in the coming Qs. The most important element, we think, was the writedown of the Fine Silicon assets – a move we have long indicated was likely. Taking into account these writedowns, we estimate tangible book value has been reduced from ~$8.50/share to ~$6.00/share. While we think this is a major step toward righting the “real” book value, we think more writedowns are necessary.”

Jonathan Dorsheimer, Canaccord Genuity: Reiterates a Hold rating on Canadian Solar shares, although he raised his price target to $5 from a prior $3 target. “CSI is the second company to recently positively preannounce Q4 volumes, but coincidentally a competitor, generally regarded as Tier 1, that we do not cover issued opposite guidance. We view this fact modestly positively for CSI as it shows some market share gains in a tough environment. As we wrote previously the Q4 strength is a double-edged sword in the solar space in that is will likely lead to further subsidy cuts and potential caps, and thus more pricing pressures and potential demand headwinds in 2012.”

Sam Subinsky, Wells Fargo: Reiterates a Market Perform rating on Canadian Solar, and raises his EPS estimates for last year and this year to a loss of just $1.06 per share last year and a loss of 50 cents this year, versus his prior estimate for negative $1.09 per share last year and negative 75 cents this year. He also reiterates an Outperform on Yingli stock. Regarding CSIQ’s announcement, “Shipment growth of 23% QoQ is atypically strong given the negative fallout from global subsidy cuts, seasonal patterns, and vs. peers which have already updated guidance (STP’s 4Q shipments are down 10%, while YGE is down 30%). Perhaps higher exposure to Japan and Canada are factors as these regions have less competition vs. European/U.S. markets. While we would like to call a bottom for the solar industry as lower pricing spurs higher demand, and as supply becomes more rational, subsidy risk could derail a recovery. Germany is discussing another round of revisions to be implemented as early as April; 2011 installs were 7.5G, well above prior targets of 3-4GW.” Yingli is likely “in the penalty box” now for some time as investors wait to hear about subsidy directions. But “YGE is the best positioned in China, which is a small market today, but has the best long-term growth prospects.”

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There are 5 comments

FEBRUARY 22, 2012 4:09 P.M.

gebby wrote:

why is YGE best positioned in China? I thought STP and LDK were well positioned in China. Citibank analyst is useless as he said sell YGE at 2.89. He can say he was right on the fundamentals but the stock is now 4.34 probably going back up to 5.30 at least. All solars are down today only because of the decision again on fit out of Germany due tomorrow before the bell.

FEBRUARY 22, 2012 4:58 P.M.

DucPho wrote:

That is because most investors (that I know) consider "analysts" to be paid bashers (i.e crooks.) We don't read Alpha, Fool or Barrons anymore.

FEBRUARY 22, 2012 8:45 P.M.

Dr. Duru wrote:

This is a useful summary of what the analysts are saying in response. Interesting to see the divergence in results producing a broad spectrum of opinion. Even people who don't pay attention to analyst chatter or read the articles producing them are paying attention it seems...

FEBRUARY 23, 2012 11:06 A.M.

stool wrote:

YGE rocks!!!!

FEBRUARY 23, 2012 3:33 P.M.

KP wrote:

It is funny....and amazing how valuations and price targets are more based on the order of good news versus bad news. What about the fact that some of the best companies in the industry trade a huge discounts to book value.

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Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.